Health Connections cuts commercial line
Vendor Evolent Health to acquire small and large group business offerings
New Mexico Health Connections, an Albuquerque-based nonprofit health insurance cooperative, said Wednesday it will sell its commercial line of business to a longtime vendor, a move the insurer said will help bolster its financial solvency.
Under the terms of the agreement with the publicly traded Evolent Health, the Arlington, Va.-based company will pay $10.5 million in cash to acquire Health Connections’ small and large group business lines and establish a for-profit entity called True Health New Mexico.
Health Connections will continue as a provider of Affordable Care Act insurance in 2018 to about 18,000 members under a management services agreement with True Health, a wholly owned subsidiary of Evolent. The company, which focuses on healthcare information services, has been a Health Connections vendor for certain aspects of its health plan administration.
The organizations anticipate that Health Connections’ 22,000 commercial members, provider network contracts, executive leadership team and about 80 employees will transition to True Health New Mexico by Jan. 1. The deal requires the approval of the state superintendent of insurance.
Officials from both entities would not say which of New Mexico’s insurers it would be vying with to grow future market share in the small and large group arenas. The new company also looks to expand its footprint in the Medicare Advantage market and federal employee insurance plans in the 2019 enrollment year.
Dr. Martin Hickey will continue in his role as CEO of the co-op for a period of time before transi-
tioning to the helm of True Health. The same leadership teams and employees are still in place, and the workforce is expected to grow, said Hickey.
“The resources will significantly increase NMHC’s solvency, which means NMHC will be able to continue to offer health plans for individuals on and off the exchange, despite the massive uncertainty generated by the federal government in the healthcare market,” said Hickey.
Health Connections is among 24 cooperative, nonprofit health plans in the U.S. that were funded with loans by the federal government as part of what has become known as Obamacare. It began selling policies to individuals and small businesses in 2012. Four are still in existence.
The ACA authorized consumer-directed cooperatives that were designed to increase competition among health insurers. The co-ops were allowed to sell commercial products off the exchanges.
Health Connections received a fiveyear, $6 million loan from the federal government to cover start-up costs and a second $64 million, 15-year loan to adequately capitalize the cooperative when it started selling insurance.
The loan commitment for launching the co-op stays with Health Connections and not Evolent, said Hickey.